Stewart-Peterson Market Commentary

Closing Commentary - October 16, 2018

Top Farmer Midday Update 10-16-18

CORN: Corn futures are down 2 to 3 cents this morning, with Dec trading at 3.75-3/4 and Mar at 3.87-3/4. The recent run up, especially after yesterday's surge, likely left prices overbought and is attracting sellers this morning. U.S. corn harvest was seen at 39% complete on yesterday afternoon's Crop Progress report. The same week last year, harvest was 27% complete and the average is just 35% complete, so this was yet another negative factor today. Corn conditions were unchanged at 68% good to excellent. Both the Dec and Mar contracts are still trading well above their 100-day moving average support levels. Harvest pressure is expected to continue as forecasts are opening up for harvest activity.

SOYBEANS: Soybean futures are trading 7 to 8 cents lower this morning, with Nov down 7-1/4 to 8.84-1/4 and Jan down 7-1/4 to 8.98-1/2. Yesterday's 24 cent gains left prices in overbought territory above the 100-day moving average resistance levels. Prices have since fallen back below this morning, but losses have been kept in check due to slowing harvest pace. Soybean harvest is said to be 38% complete vs 47% complete the same week last year and 52% complete on average. Soybean conditions were 66% good to excellent vs 68% last week, likely due to excess moisture and freezing temps in the Dakotas. Though many farmers are still unable to pick up soybean harvest today, drying and warming forecasts should open up a window in the next week.

WHEAT: Wheat futures are lower this morning, with Dec Chi down 3/4 of a cent to 5.24-1/4, Dec KC wheat down 2-3/4 cents to 5.29, and Dec Mpls wheat down 1-1/4 cents to 5.99-1/4. U.S. winter wheat plantings are 65% complete vs 57% complete last week, 58% a year ago, and 67% on average. This was right in line with expectations, hence a muted trade session so far. Russia has been the focus of the wheat market recently. European estimates suggest Russia's 2018 winter wheat yields could be down 17% from last year and spring wheat yields could be down as much as 5.3% from last year. Export quality concerns persist, with India preparing to reject Russian cargos.

CATTLE: Cattle futures are lower this morning, falling back below moving average support. The spot month Oct live cattle contract is down 67 cents to 112.70 and Dec is down 47 cents to 117.50. Oct feeders are down 95 cents to 154.15 and Nov feeders are down 85 cents to 154.37. Beef prices have jumped in recent sessions providing support, but traders are not convinced this will continue. Production for Q4 and Q1 look burdensome keeping hedgers on high alert. Dec live cattle are still holding their 10-day moving average support after falling below support at the 20-day moving average.

HOGS: Hog futures are moderately higher with conflicting fundamentals leaning positive this morning. The Dec contract is up 95 cents to 57.70 and Feb is up 85 cents to 64.75. Dec hogs are currently trading at a wider-than-normal discount to the cash market for this time of year. Given the record supply outlook for Q4 and slow export pace, the larger discount seems justified. However, slaughter in recent weeks has been slower than last year, helping support pork prices. In addition, AFS concerns are still swirling. Dec and Feb futures have both tested overhead resistance so far this morning but have been unable to push through with much determination.

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